Corixa Corporation, a developer of immunotherapeutics, had entered into a new manufacturing and supply agreement with GlaxoSmithKline Biologicals (GSK) covering the production of Corixa's flagship adjuvant, monophosphoryl lipid A or MPL. Corixa's MPL adjuvant is a component in GSK Biologicals novel, proprietary adjuvant systems used in the development of future vaccines currently undergoing clinical trials or awaiting regulatory approval, company release said.

The agreement, which runs through 2012, guarantees payment to Corixa for supplying GSK with increasing annual quantities of MPL peaking in 2008 at the current maximum output of Corixa's Hamilton, Montana, MPL manufacturing facility (approximately 2 kilograms/year). Under the terms of the agreement, Corixa has agreed to expand cGMP compliant MPL production capacity in association with anticipated approvals of GSK vaccines that contain MPL adjuvant.

Steven Gillis, chairman and chief executive officer of Corixa said, "This new agreement with GSK establishes a solid foundation for long-term adjuvant revenue and provides proper incentives for us to meet the requirements of the guaranteed supply contract. We look forward to continued progress of GSK vaccines in the clinic and the transition of our MPL adjuvant as a component in a growing number of commercial vaccines."

Corixa will receive a multi-million dollar up front licensing fee and will grant GSK a co-exclusive license to manufacture MPL at amounts over and above the maximum annual output from Corixa. The manufacturing agreement can be renewed at GSK's option for multiple, three-year periods beyond 2012, the release said.

Other elements of the agreement include- increased base pricing and annual price increases for MPL; payment of royalties to Corixa by GSK on all GSK vaccines containing MPL adjuvant until 10 years after market introduction of GSK's human papilloma virus vaccine; and a provision for Corixa to repay a prior $5 million loan from GSK in Corixa stock instead of cash.

Finally, the agreement calls for GSK and Corixa to co-fund a multi-year MPL adjuvant development programme for a large-scale production process. Improvements in the process derived from this work will be co-owned by Corixa and GSK. If the process is implemented and results in increased Corixa plant production capacity, and if GSK then revises orders of MPL to levels above those currently contemplated, GSK will receive a pre-negotiated discount on the amount of MPL it orders over and above today's plant capacity.